Ethereum Exchange Reserve Down By Over 30%
Every week, new lows in Ethereum Exchange reserves are consistently being recorded, with the following low being lower than the previous.
Downward Trajectory In The Ethereum Reserves
According to on-chain metrics, the Ethereum token’s entire reserve has decreased by 39% since more withdrawals have been made in 2022 than in any other year.
On-chain metric from the cryptocurrency analysis company CryptoQuant, shows that investors who may have planned to hold for the long term suddenly changed their minds and proceeded to remove their money from this reserve.
This exchange reserve is a metric or indicator that shows the total number of Ethereum tokens in all crypto currency wallets on all centralized exchanges.
When this metric shows an upward shift or trajectory, it indicates that investors are making deposits to this exchange and storing it for future use.
Why Investors Store Their Tokens On Centralized Exchanges
These exchanges act as a medium for quickly converting ETH or other digital assets to fiat currencies.
This suggests that this exchange reserve can act as a supply for selling assets, potentially leading to a bearish run.
However, a decrease in the exchange metrics indicates that investors are withdrawing their funds from this exchange, which could be for a variety of reasons, including fear of liquidation or for their own use, as well as instability and volatility in crypto prices.
This indicates that the selling supply is decreasing.
An extended period of exchange withdrawals, on the other hand, could indicate that investors are amassing and holding to the moon, which could herald the start of a bullish run.
However, the Ethereum reserve has been on a downward trend, indicating FUD (Fear, Uncertainty and Doubt). The Ethereum chart shows that the token has experienced its steepest decline since 2021.
It is worth noting that the steepest decline occurred during the FTX crash, which sent shockwaves through the market, devouring almost all crypto funds on boarrd.
The crash made investors wary of centralized exchanges, resulting in a massive withdrawal of funds from crypto exchanges and a shift to their personalized decentralized wallets.
This crash might have effectively ended the debate over the superiority of decentralized exchanges over centralized exchanges.
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